U.S. Stocks Gain on Jobs Data While Treasuries, Euro Fall

By Stephen Kirkland and Lu Wang -
Dec 7, 2012

U.S. stocks rose for a third day as
faster-than-forecast growth in jobs overshadowed concern about
budget negotiations and a slide in Apple Inc. (AAPL) Treasuries
dropped, while the euro fell on concern about German growth.

The Standard & Poor’s 500 Index (SPX) climbed 0.3 percent to
close at 1,418.07 at 4 p.m. in New York, its highest level since
the Nov. 6 elections. The yield on 10-year Treasuries increased
four basis points to 1.63 percent. The euro slid 0.3 percent to
$1.2926 after the Bundesbank lowered its 2013 projection for
German economic growth to 0.4 percent from the 1.6 percent
predicted in June. Oil lost 0.5 percent to $85.93 a barrel in a
fourth straight decline.

Equities opened higher after the Labor Department said U.S.
employment increased by 146,000 in November and the jobless rate
fell to an almost four-year low, easing concern that superstorm
Sandy reduced hiring. Stocks pared gains as a gauge of consumer
confidence trailed forecasts and House Speaker John Boehner said
no progress had been made in talks to avert the “fiscal cliff”
of automatic tax increases and spending cuts set to take effect
next year.

“There is a lot of confusion and there are a lot cross
currents here to consider,” Terry L. Morris, who helps oversee
about $2.5 billion at Wyomissing, Pennsylvania-based National
Penn Investors Trust Co., said in a phone interview.
“Unemployment has improved, yet confidence has deteriorated.
How do you explain the market isn’t doing anything when Boehner
comes out and says we’re nowhere? It seems like the market
should have been going down, but the fact it’s not tells me that
the market wants to go higher.”

Technical Level

Today’s gain pushed the S&P 500 above its average from the
past 50 days for the first time since Oct. 19, according to data
compiled by Bloomberg. The index had spent the previous 32 days
below the threshold, the longest streak since the 52-day stretch
that ended Oct. 7, 2011, the data show. The average is
watched by traders to gauge the market’s trends.

Apple, the largest company by market value, sank 2.6
percent and was the biggest drag on the S&P 500. Financial,
commodity and consumer-staples companies led gains among the 10
main industries while technology shares were the only group to
fall. JPMorgan Chase & Co., Caterpillar Inc. and Bank of America
Corp. rose at least 1.2 percent to lead the Dow Jones Industrial
Average (INDU) up about 81 points.

Economic Data

The median estimate of 91 economists surveyed by Bloomberg
called for a gain of 85,000 jobs. Sandy “did not substantively
impact” the data, the agency said. The unemployment rate fell
to 7.7 percent, the lowest since December 2008, as size of the
labor force shrank.

The Thomson Reuters/University of Michigan preliminary
index of U.S. consumer sentiment for December fell to 74.5 from
82.7 a month earlier. Economists projected 82 for the gauge,
according to the median estimate in a Bloomberg survey.
Projections of the 67 economists surveyed ranged from 80 to 88.

The Stoxx Europe 600 Index climbed 0.1 percent and ended
the week with a 1.2 percent gain. Berkeley Group Holdings Plc
jumped 4.7 percent to a five-year high as the U.K.’s second-
largest homebuilder by market value said first-half profit rose
45 percent. Deutsche Telekom AG, Germany’s biggest phone
company, fell 1.9 percent after forecasting a lower dividend for
the first time in three years.

The euro slipped against all but three of its 16 major
counterparts. A majority of ECB policy makers were open to
cutting the benchmark rate yesterday and there is a possibility
of a reduction early next year if the economy doesn’t pick up,
three officials with knowledge of the Governing Council’s
discussions said.

“The euro will continue to be sold,” said Kikuko Takeda,
senior currency economist in London at Bank of Tokyo-Mitsubishi
UFJ Ltd. “Europe is in recession and with no prospects of it
getting better any time soon.”

Commodities Retreat

Agricultural commodities led losses in the S&P GSCI Index,
which lost 0.4 percent. Soybean futures fell for the first time
this week and corn extended its decline on speculation that
planting delays will end in Argentina while rain improves crop
conditions in Brazil. Wheat also slid.

Gold futures for February delivery rose 0.2 percent to
settle at $1,705.50 an ounce. Gold traders are the least bullish
in seven weeks as Goldman Sachs Group Inc. said the metal’s
longest winning streak in at least nine decades will peak next
year amid accelerating U.S. growth.

Fourteen of 31 analysts surveyed by Bloomberg expect prices
to rise next week and 10 were bearish. A further seven were
neutral, making the proportion of bulls the lowest since Oct.
19. Goldman lowered its 12-month estimate by 7 percent to $1,800
an ounce on Dec. 5 and said the metal would average $1,750 in
2014. Morgan Stanley said yesterday bullion will be among next
year’s best-performing commodities.